FCA records sharp rise in unauthorised trading and brokerage firms

Britain’s FCA is one of the most prominent, active and strict financial markets regulators, which is particularly vocal when it comes to hunting down scammers and protecting the investing public. It is not surprising therefore that it has felt the need to alert the public once again on the issue of Unauthorised Forex (FX) trading and brokerage firms, since at it mentions it has “seen a sharp rise in reports from consumers about unauthorised trading and brokerage firms.”

The British watchdog explains that such firms offer consumers the chance to trade in foreign exchange, contracts for difference, binary options and other commodities and that they promise very high returns, while also often talking about guaranteed profits either through a managed account where the firm makes trades on the consumer’s behalf or by enabling the consumer to trade themselves using the firm’s trading platform.

As firms offering such services in the UK need to be authorised by the FCA, the regulator underlines that many of the firms reported are not authorized, but rather, they falsely claim to be based in the UK and often provide a prestigious city of London address, when in reality, they have no physical presence in the UK and are not based at the addresses they provide.

Citing the experiences of many consumers the FCA that the scam, often works in the following manner: Consumers,  “will initially receive some returns from the firm to give the impression that their trading has been a success. They will then be encouraged to invest more money and at this stage or soon after, the returns will stop, their account will be suspended and they will be unable to make further contact with the firm.”

Therefore, the FCA urges consumers wishing to trade in high risk investments such as foreign exchange and contracts for difference, to make sure they only deal with FCA authorised firms, and to verify this by checking the FCA register of authorised firms before dealing with any firm.

The FCA further warns that brokerages that are not authorised, are likely to be a scam and thus their customers are at risk of losing all their money. Hence, it urges all investors to be aware of bogus trading/ brokerage firms that pretend to be genuine and also raises attention to the fact that fraudsters keep adapting their tactic. This is why it encourages interested traders to make additional checks to confirm that they are dealing with the financial services firm in question and have the correct contact details – especially if they have been cold-called. This might include checking the details on the firm’s website, or with directory enquiries or Companies House.

 

Finally, the FCA reminds consumers that if they I deal with an unauthorised firm they will not be covered by the Financial Ombudsman Service (FOS) or Financial Services Compensation Scheme (FSCS) if things go wrong.

  • Share this post!
Posted by

Varushka Vinogradova

Varushka Vinogradova is a prolific part of the global SEO community worldwide.

Scam Alert: FCA warns against binary broker RBS Bourse

Scam Alert: FCA warns against binary broker RBS Bourse

Last month the French financial markets watchdog, the AMF, had added binary options broker RBS Bourse to its “Black List” of unauthorized binary options firms. At look at this entity’s website reveals that although it claims to be based in London its main working language is French and it appears...…

Published: Thursday 29 October, 2015

UK’s FCA uncovers problems in CFD client onboarding

UK’s FCA uncovers problems in CFD client onboarding

After a conducting a review in a sampled of ten firms that offer CFD products to clients on a non-advised basis in the UK, which covered both smaller and larger firms in the sector, with the purpose of assessing whether the followed client take-on procedures were in accordance with the rele...…

Published: Thursday 29 October, 2015

FCA warns against Binary Options Broker CTOption

FCA warns against Binary Options Broker CTOption

Through a warning to the public issued on 1st November 2016, the UK’s financial regulatory body, the Financial Conduct Authority (FCA), informs all investors of its belief that a UK-based company trading under the name CTOption has been providing financial services or products without regulatory ...…

Published: Thursday 29 October, 2015

FCA says FX firm KSFTrade is unlicensed

FCA says FX firm KSFTrade is unlicensed

Britain’s financial markets regulator, namely the Financial Conduct Authority (FCA), which is one of the strictest regulators around and on a permanent campaign to protect investors from unscrupulous brokers, has recently issued a warning with regard to an unlicensed retail FX brokerage which ope...…

Published: Thursday 29 October, 2015